Supermarket price wars leads to trade mark dispute

1st September 2022

The grocery retail market in the UK is highly competitive. Big supermarkets are constantly vying with each other to win and retain customer loyalty. In years gone by, the market was dominated by the ‘big four’ – Tesco, Sainsbury’s, Asda, and Morrisons. More recently though, their grip on the market has been increasingly loosened by newer entrants. Discount supermarkets such as Lidl and Aldi, have made a name for themselves with a focus on value for money. It’s against this backdrop that an interesting trade mark dispute has arisen between Lidl and Tesco.

Supermarkets are now working harder than ever to win over customers with low prices and value for money. You’ll find them frequently engaging in so-called ‘price wars’ and ‘price matching’ with their competitors.

Trade mark Dispute – Lidl v Tesco

Lidl has alleged trade mark and copyright infringement of it’s logo in proceedings issued to the High Court.

The discount retailer owns the trade mark registrations for the logo on the left. It also owns the registrations for the logo without the word Lidl (the ‘wordless mark’), shown on the right.

Lidl argues that Tesco’s use of its Clubcard logo, seen below, infringes Lidl’s wordless mark. It claims unfair advantage and/or being detrimental to the distinctive character or repute of Lidl’s wordless mark.

Unfair advantage

Lidl argues that such unfair advantage is gained because Tesco’s use of the Clubcard logo is deliberately intended to call Lidl to mind amongst Tesco shoppers, to be suggestive that the prices offered by Tesco are the same or lower than those offered by Lidl (that Tesco is price matching Lidl, contrary to fact).

While the trial is not until February 2023, the case has recently had an outing before the English High Court to decide on Lidl’s applications to:

• Strike out Tesco’s allegation that Lidl’s wordless logo trademarks were filed in bad faith; and
• Have Lidl’s distinctiveness survey evidence admitted.

Lidl succeeded in both applications.

High Court rulings

With regard to the strike-out application, Tesco had pleaded that Lidl had filed for the wordless logo trademarks in bad faith by, allegedly, not having an intention to use them as such (as distinct to the logo with the word LIDL, which had, of course, been widely used) and by ‘evergreening’ the marks by making repeat applications so as to avoid the need to prove use.

Following a thorough review of the law on bad faith (including the recent Skykick decisions), Joanna Smith J concluded the question to be determined was whether the facts pleaded to establish bad faith are, or may be, sufficient to shift the evidential burden and lead to the rebuttal of the presumption that the marks were filed in good faith. The judge concluded that Tesco’s pleadings did not disclose any reasonable grounds for making the bad faith allegation and it must therefore be struck out. This decision has now been appealed by Tesco to the Court of Appeal.

A mark of distinction

Lidl also applied to have its distinctiveness survey evidence admitted. The importance of the survey was that, according to Lidl, it showed that a large proportion of UK shoppers regarded the wordless mark as being distinctive of Lidl (even without the word LIDL).

This mattered because Lidl’s case is that while it may not have used the wordless mark on its own, use of the mark with LIDL on it also constituted genuine use of the wordless mark (thus saving it from revocation for non-use) because the distinctive character of the wordless mark is not being altered (pursuant to the Specsavers decision).

The judge assessed the likely value of the survey by reference to the well-established Whitford Guidelines from the Interflora cases, concluding that it had “real value in the context of this case” and that the costs of dealing with the survey were proportionate.

The case now proceeds to trial in February 2023.

The judgment can be found here. Bird & Bird act for Lidl in this case.